Nokia launches tablet to join Microsoft gadget push

ABU DHABI/HELSINKI | By Matt Smith and Ritsuko Ando

People attend a Nokia launch ceremony in Abu Dhabi October 22, 2013.

Reuters/Ben Job

ABU DHABI/HELSINKI Nokia (NOK1V.HE) unveiled its first tablet computer and new large-screen smartphones, which will form part of Microsoft's (MSFT.O) push in consumer devices when it takes over the Finnish company's handset business.

The products serve as a poignant way to mark the end of an era for the former global leader in mobile phones, representing its engineers' last-ditch attempts at regaining market share from Apple (AAPL.O) and Samsung (005930.KS) after its pitifully slow start to the smartphone race.

Analysts said that the Lumia 2520 tablet, along with the Lumia 1320 and 1520 smartphones with 6-inch screens, are priced low enough to attract interest but questioned whether they could compete with rivals launching similar products in time for the gift-giving holiday season.

The launch of the Lumia tablet with a 10-inch screen came only hours before Apple, the trailblazer in lightweight mobile computers, was expected to unveil new iPads.

Another concern voiced by analysts is that Nokia's tablet could also clash with Microsoft's own Surface tablets once the U.S. software company's acquisition goes through. The deal is expected to close early next year after a Nokia shareholder vote on November 19.

Nokia's new large-screen smartphones, known as phablets, face an equally daunting task competing against a multitude of similar devices from market leader Samsung.

The Finnish company's 2011 decision adopt Windows Phone software has failed to pay off and Apple's iOS and Google's GOO.O Android operating systems control more than 90 percent of the smartphone market.

PLENTY TO PROVE

"Nokia and Microsoft still have a lot to prove with respect to Windows Phone," said Kevin Restivo, an analyst at research firm IDC. "The new products address the demand for large-screen devices. But for consumers ... the question is, why should I choose Windows."

Previous Lumia devices have been well received by technology blogs and critics, but sales have been slow, partly because of a lack of Windows Phone apps.

IDC estimates that Windows Phone's market share grew to 4.2 percent in the third quarter from 3.7 percent in the previous three months.

Nokia is targeting the top end of the market with the Lumia 1520 smartphone, hoping that potential customers agree that a high-resolution 20-megapixel camera justifies an estimated price tag of $749 when it goes on sale this year. The cheaper Lumia 1320 will follow next year at an estimated $339.

The Lumia 2520 tablet, meanwhile, will be available in glossy red and white as well as matt cyan and black versions when it goes on sale at an estimated $499, with Nokia saying that it will be targeting Christmas and Thanksgiving shoppers in the United States.

Its challenge to Apple's iPad could be enhanced by business applications such as Microsoft Word and Excel, an optional keyboard cover to allow full finger-and-thumb typing and two USB ports for additional devices.

PORTFOLIO CLASH?

Yet the Lumia's position in the Microsoft stable remains a concern for some analysts.

At midnight on Monday, Microsoft started selling its Surface 2 and Surface Pro 2 tablets. Still feeling its way in the computer hardware business, the company is banking on the lighter and faster models boosting the lacklustre sales of its touch-screen devices.

"Despite a more affordable price, the respective positioning of Nokia's tablet versus the Surface 2 is not obvious and will have to be dealt with after the Nokia acquisition," Forrester analyst Thomas Husson said.

The Surface 2 starts at $449 for the 32 GB version, while the Surface Pro 2, starts at $899 for the 64 GB model.

Stephen Elop, the former Nokia chief executive who now heads the devices business and will return for his second stint at Microsoft when the acquisition closes, said that the U.S. company will adjust accordingly.

"As we come together as one company we'll assess the whole portfolio and how best to meet the needs of consumers," Elop told Reuters at the Lumia launch event in Abu Dhabi.

Microsoft, which now bills itself as a "devices and services" company under a reorganisation started by CEO Steve Ballmer this summer, is desperate to make a dent in the iPad's dominance as sales of traditional PCs melt away. So far, it has failed badly, taking a $900 million charge in July for unsold Surface inventory.

(Editing by David Goodman)

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